Tesla shares have been suspended following Elon Musk’s tweets on taking company private | City A.M.
Tesla shares were suspended yesterday evening following a string of tweets by billionaire founder Elon Musk in which he said he was considering taking the company private, leading to a share price spike.
Tesla shares came to a halt up 7.39 percent at $367.25.
Musk raised eyebrows when he took to Twitter to claim he had secured funding to take Tesla private at a share price of $420 (£325).
CNBC quoted a former US Securities and Exchange Commission chair as saying that Musk’s surprise announcement was “highly unprecedented… and raises significant questions about what his intent was.”
Former SEC chair Harvey Pitt on @CNBC: Disclosure of material info on Twitter isn’t new, but @elonmusk’s mention of potential go-private price is “highly unprecedented… and raises significant questions about what his intent was.”— Kayla Tausche (@kaylatausche) August 7, 2018
Tesla later put out a statement from Musk in which he said he wanted to get past the “quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term”.
Read more: Tesla shares up as it says it should be profitable this year
He also floated the idea that Tesla could go public again, once Tesla “enters a phase of slower, more predictable growth”.
Initially there were suggestions that the vagueness of Musk’s tweets meant he might not have been serious, or even that he had been hacked.
However, he appeared to corroborate his words with follow-up tweets in which he said: “I don’t have a controlling vote now & wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario.”
He also attempted to reassure investors, saying: “Def no forced sales. Hope all shareholders remain. Will be way smoother & less disruptive as a private company. Ends negative propaganda from shorts” – referring to market short sellers that have stalked the stock.
One investor, the CEO of Gerber Kawasaki Wealth & Investment Management, Ross Gerber, said he had “no intention” of selling his shares at $420. “The stock is worth $570 a share based on 2019 revenue. No way Elon, I’m keeping my stock,” he said on Twitter.
Tesla shares were already experiencing a boost following reports that Saudi Arabia’s sovereign wealth fund has built a reported three to five per cent stake in Musk’s company, in what has been seen as the latest bold move by the crown prince Mohammed bin Salman to modernise his kingdom.
For some watchers, the news that Musk is considering whether to take Tesla private may not come as a huge surprise, given the CEO’s often fraught relationship with Wall Street.
He has often complained that Wall Street is obsessed with quarterly financials at the expense of long-term growth and vision, and famously lashed out at analysts’ “boneheaded” questions. Musk took Tesla public in 2010 but kept SpaceX – which has endured its own troubles – private.
The past year has been rocky for Tesla financially and last week it posted a mixed bag of results. Revenue in the three months to 30 June was ahead of expectations at $4bn, but its losses were steep – $742m – as the electric car company continued to burn through cash.
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